7.4 Conclusions
169
companies and smallholders. The sector provides rural communities with a muchneeded income that reduces their poverty, but the allocation of rights, roles, benefits
and burdens is highly inequitable. Moreover, the environmental degradation caused
by oil palm plantations further makes their continuous expansion unsustainable,
despite attempts to frame them as climate-friendly due to their role as carbon sinks.
This chapter’s analysis indicates the following reasons for the prevalence of such
a development strategy to date. On a more immediate level, this biofuel production
pattern is due to a combination of foreign investments and supportive domestic policies, causes that appear to be interdependent. Such investments play a more significant
role in Indonesia than in Brazil or India (see Chapters 5 and 6). However, domestic
policies arguably remain the only sine qua non cause both for biofuel expansion
and for the particular shape it has taken. Those policies have included: consumption
targets and blending mandates to create an artificial demand for biofuels, regulatory changes to encourage investments in feedstock crop cultivation, and generous
subsidies to private palm oil industries. Finally, the Government of Indonesia has
also created a national certification scheme (ISPO) to increase market penetration
abroad.
Underpinning these policy instruments is a strategy to enhance food and energy
production while creating jobs on plantations. To increase legitimacy, this is framed
as Indonesia’s contribution to national and global food and energy security. In the
oil palm case, there is also a norm—reflected in the “plasma obligation”—to integrate smallholders, create jobs, and reduce rural poverty. The biggest challenge,
however, has been to harmonize oil palm plantations and international norms on
sustainability, which have become increasingly important for foreign market acceptance. Indonesia’s answer has been the ISPO certification, which arguably owes much
more to international normative pressures than to genuine domestic concerns.
These priorities and approaches, in turn, stem from the policy beliefs of state and
private-sector advocates of agribusiness. These agents have firmly pushed for plantations as a form of land use and development, sometimes going as far as to frame
them as environmentally friendly due to their function as carbon sinks. However, this
coalition’s dominance does not owe so much to its discourse but to the instrumental
and structural power it exerts. These forms of power mainly rely on the private financial resources the coalition commands and on the positions of legal authority held in
the government. In the latter, bureaucracy has been manipulated to either facilitate or
block courses of action—as it has happened to the Village Forest program. Another
critical factor is that the adversary, conservation coalition has not yet offered an
alternative development path. Instead, it mostly criticizes the mainstream agenda and
defends conservation interests without saying much about addressing the country’s
development needs sustainably. Arguably, this gap is the origin of much of the criticism received by the conservationists in Indonesia. It is perhaps the main reason for
the lack of alignment with farmers and for the coalition’s limited effectiveness so far.
Finally, this oil palm expansion strategy’s distributive outcomes and social impacts
are arguably the ultimate reason it has prevailed. As in India, there is a systematic
transfer of legal or de facto control over land and freshwater resources from local
169
companies and smallholders. The sector provides rural communities with a muchneeded income that reduces their poverty, but the allocation of rights, roles, benefits
and burdens is highly inequitable. Moreover, the environmental degradation caused
by oil palm plantations further makes their continuous expansion unsustainable,
despite attempts to frame them as climate-friendly due to their role as carbon sinks.
This chapter’s analysis indicates the following reasons for the prevalence of such
a development strategy to date. On a more immediate level, this biofuel production
pattern is due to a combination of foreign investments and supportive domestic policies, causes that appear to be interdependent. Such investments play a more significant
role in Indonesia than in Brazil or India (see Chapters 5 and 6). However, domestic
policies arguably remain the only sine qua non cause both for biofuel expansion
and for the particular shape it has taken. Those policies have included: consumption
targets and blending mandates to create an artificial demand for biofuels, regulatory changes to encourage investments in feedstock crop cultivation, and generous
subsidies to private palm oil industries. Finally, the Government of Indonesia has
also created a national certification scheme (ISPO) to increase market penetration
abroad.
Underpinning these policy instruments is a strategy to enhance food and energy
production while creating jobs on plantations. To increase legitimacy, this is framed
as Indonesia’s contribution to national and global food and energy security. In the
oil palm case, there is also a norm—reflected in the “plasma obligation”—to integrate smallholders, create jobs, and reduce rural poverty. The biggest challenge,
however, has been to harmonize oil palm plantations and international norms on
sustainability, which have become increasingly important for foreign market acceptance. Indonesia’s answer has been the ISPO certification, which arguably owes much
more to international normative pressures than to genuine domestic concerns.
These priorities and approaches, in turn, stem from the policy beliefs of state and
private-sector advocates of agribusiness. These agents have firmly pushed for plantations as a form of land use and development, sometimes going as far as to frame
them as environmentally friendly due to their function as carbon sinks. However, this
coalition’s dominance does not owe so much to its discourse but to the instrumental
and structural power it exerts. These forms of power mainly rely on the private financial resources the coalition commands and on the positions of legal authority held in
the government. In the latter, bureaucracy has been manipulated to either facilitate or
block courses of action—as it has happened to the Village Forest program. Another
critical factor is that the adversary, conservation coalition has not yet offered an
alternative development path. Instead, it mostly criticizes the mainstream agenda and
defends conservation interests without saying much about addressing the country’s
development needs sustainably. Arguably, this gap is the origin of much of the criticism received by the conservationists in Indonesia. It is perhaps the main reason for
the lack of alignment with farmers and for the coalition’s limited effectiveness so far.
Finally, this oil palm expansion strategy’s distributive outcomes and social impacts
are arguably the ultimate reason it has prevailed. As in India, there is a systematic
transfer of legal or de facto control over land and freshwater resources from local